The usual handicapping for a new Fed Chair is happening, but likely it’s too early. Lael Brainard and William Spriggs would be front-runners. Jay Powell's term is up next February, when Biden can choose to extend his appointment. We’ll know so much more then, what with a looming recession.
But the Fed chief, who joined the central bank's board of governors in 2012 after being nominated by then-President Barack Obama, isn’t without progressive support. He achieved consensus at the central bank for a new framework in which the Fed has vowed to vigorously pursue full employment rather than prematurely slow economic activity with higher interest rates in anticipation of inflation, a move that could spread greater prosperity to marginalized communities. That has earned him some prominent allies.
“My hope would be that he would be reappointed,” said William Spriggs, a professor at Howard University and chief economist at the AFL-CIO, a significant statement of support since Spriggs himself is often touted on the left as a potential pick to head the central bank.
“I don’t think people should take lightly” how significant the Fed’s pro-worker shift has been under Powell, said Spriggs, adding that “we need a little stability at the Fed after having gone through four years of Trump.”
The message from groups like the Action Center for Race and the Economy, though, is that the Fed chair’s actions have not been nearly enough. They point to the central bank’s emergency program for states and cities last year, which ultimately gave out loans to only two borrowers — Illinois and New York City’s transit system. They argue that’s because the Fed didn’t make the terms as generous as a separate program for corporate borrowers.
The group also cites Powell’s resistance to taking more responsibility for combating the wealth disparity between white people and other racial groups. Just last week, he reiterated that he didn’t think it made sense for Congress to make that part of the Fed’s official mandate.
President Joe Biden claimed last Wednesday that the last five leaders of the Federal Reserve had declared that his American Jobs Plan proposal will increase economic growth.The American Jobs Plan, which you can read about here, would spend roughly $2 trillion on infrastructure projects and other initiatives. Biden has proposed to pay for the spending by increasing the statutory corporate tax rate from 21% to 28% and to make a variety of other tax changes, including a major increase in tax enforcement against corporations.“And, by the way, you saw — you know, the — the last five leaders of the Fed coming out and saying — what'd they say? They said, 'Biden's plan is going to grow the economy,'” Biden said in his Wednesday speech at the White House.
Facts First: Biden's claim is false. As a White House official acknowledged to CNN when we sought comment on Monday, Biden was inaccurately referring to an opinion article published in the Washington Post that day by five former leaders of the Internal Revenue Service, not five former leaders of the Federal Reserve; only three past chairs of the Federal Reserve are even alive. The former IRS commissioners did not say anything about how Biden's plan would affect economic growth. Rather, they said Biden's proposals — including a well-funded effort to crack down on the non-payment of taxes owed — would make the tax administration system “far fairer and more effective” and “produce a great deal of revenue by reducing the enormous gap between taxes legally owed and taxes actually paid.”
Even if this was an accidental mix-up by Biden, it was a substantial mix-up. A positive economic forecast from former tax chiefs is almost certainly less likely to sound impressive to the public than a positive economic forecast from people who ran the US central bank and are among the nation's best-known economic figures. And, again, there was no economic forecast at all in the tax chiefs' article.
The most recent past leader of the Fed, Janet Yellen, is now Biden's Treasury Secretary. Her predecessor, Ben Bernanke, now a distinguished fellow at the Brookings Institution think tank, said in an email to CNN on Monday: “I have not made any public remarks on the infrastructure plan, so far as I can recall.” The other living past Fed chair, Alan Greenspan, has also not weighed in on the plan; he could not immediately be reached for comment on Monday.